Some of you may have noted, given what I had to say here and again here, my view that the law of insurance coverage is not as well developed or at least not as consistent in the case law as it should be. At the end of the day, it is just policy language and facts, and it shouldn’t be so difficult for the case law to reflect a consistent approach to insurance policy issues. Admittedly, such a project is complicated by the reality that the facts and the policy language differ from case to case, and the truth is that the slightest change in either variable can affect the outcome. I once spent years litigating a case that at the end of the day, turned on the distinction between the word damage and the word damages; I came to think of it as the Sesame Street case, with the case eventually focusing on the “letter of the day,” and that one letter “s” becoming outcome determinative.
Additional insured clauses are a perfect example of this problem. Generally speaking, additional insured clauses simply serve the purpose of adding a third party, who would otherwise be a stranger to the relationship between the insured and its insurer, to a policy as an insured. Anyone who practices in, or anywhere near, the fields of insurance coverage, construction, architecture, professional liability or real estate, as well as a host of others, is familiar with these clauses, and has probably noted as well the variability in the policy language often used in such clauses. In truth, what should be the simple act of adding a party to a policy as an additional insured in this manner is often rife with unexpected difficulties if and when a claim against that additional party arises, due to even slight variations in the language used in those clauses and disputed questions of fact concerning the events that gave rise to the claim against the additional insured.
What brings this to mind today are several recent discussions of issues involving additional insured clauses, and which make clear that how they should apply to any given set of facts simply is not, and probably never will be, completely settled. InHouse Blog has the story of a new development in California law on this topic, Marc Mayerson has a similar story about a New York state decision addressing the additional insured problem, and the policyholder lawyers at Anderson Kill have this to say about the choice of law complications caused by such clauses.